Question 1

In manufacturing organizations, the dollars spent with suppliers fall into what range as a percent of revenues?
A) 65 to 75.
B) 50 to 80.
C) 45 to 75.
D) 30 to 60.
E) 25 to 35.

Accepted Answer

In manufacturing organizations, the cost of goods sold, which includes the dollars spent with suppliers, typically ranges from 50% to 80% of revenues. This reflects the significant portion of expenses attributed to purchasing materials and components necessary for production.

Question 2

Supply makes a limited contribution to organizational risk management since most supply decisions have few downside risks that might impact the organization's strategy.

Accepted Answer

Supply decisions can significantly impact an organization's strategy, as disruptions or inefficiencies in the supply chain can lead to financial losses, reputational damage, and operational challenges.

Question 3

The true test of supply's contribution is when the chief executive officer and the management team recognize the value of supply and suppliers in reducing prices paid for goods and services.

Accepted Answer

False

Question 4

The return on assets effect ROA) quantifies and measures:
A) the indirect contribution of supply management to profitability.
B) any increase in sales that occurs at a greater rate than the cost of assets.
C) the impact of supply actions on inventory and the balance sheet.
D) reductions in the allocations to the operating budget of the supply department.
E) the effect on profitability of reduced spend compared to a sales increase.

Accepted Answer

The return on assets (ROA) effect measures the impact of supply actions on inventory and the balance sheet, reflecting how efficiently a company uses its assets to generate earnings.

Question 5

Sustainability initiatives include the effective and efficient capture and disposition of downstream products from customers and the reduction of the impact of the organization's supply chains on the natural environment

Accepted Answer

Sustainability initiatives aim to minimize environmental impact by managing product lifecycle and supply chain processes to be more eco-friendly and resource-efficient.

Question 6

Terms such as purchasing, procurement, supply, supply chain and logistics do not have standard definitions that are widely used across sectors and industries.

Accepted Answer

These terms can vary in meaning depending on the context, industry, or organization, leading to different interpretations and applications.

Question 7

Performance of the supply management function can be viewed in two contexts:
A) operational and trouble-avoidance.
B) operational and strategic.
C) operational and transactional.
D) strategic and opportunistic.
E) strategic and future-oriented.

Accepted Answer

Operational performance focuses on the day-to-day activities of the supply management function, while strategic performance focuses on the long-term goals and objectives of the organization.

Question 8

Since labor and other costs greatly exceed outlays for purchased materials and services in most service organizations, supply is of little consequence in most service organizations.

Accepted Answer

While labor and other costs are significant in service organizations, supply still plays a role in areas such as office supplies, equipment, and inventory for businesses such as hotels and restaurants.

Question 9

One of the most important steps in achieving the potential of the supply function in a company is elevation of the chief supply officer to executive status.

Accepted Answer

Elevating the chief supply officer to executive status can enhance decision-making, align supply chain strategies with overall business goals, and improve communication with other executive leaders, thereby maximizing the supply function's potential.

Question 10

The design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer is called:
A) strategic sourcing.
B) value management.
C) customer relationship management.
D) supply chain management.
E) strategic process management.

Accepted Answer

Supply chain management involves designing and managing processes across organizational boundaries to deliver value and meet customer needs.

Question 11

The total purchase sales ratio the percentage of sales dollars paid out to suppliers) varies little from industry to industry.

Accepted Answer

The total purchase sales ratio can vary significantly between industries due to differences in cost structures, supply chain dynamics, and business models.

Question 12

Reductions in inventory investment primarily come from getting users to reduce their demand for inventoried items.

Accepted Answer

Reductions in inventory investment can also come from improving forecasting and supply chain management processes to ensure that the right amount of inventory is available at the right time, reducing lead times, and implementing just-in-time (JIT) systems.

Question 13

Supply has the potential to contribute to:
A) cost management, profitability, return on assets, competitive position and corporate social policy.
B) cost management, profitability, return on assets and competitive position.
C) cost management, profitability and return on assets.
D) cost management and profitability.
E) cost management.

Accepted Answer

Supply can impact a wide range of business aspects including cost management, profitability, return on assets, competitive position, and corporate social policy, as it influences how resources are procured and managed.

Question 14

The increase in outsourcing has resulted in an increase in the percentage of revenue paid out to suppliers.

Accepted Answer

As a result of outsourcing, companies are paying a larger percentage of their revenue to suppliers.

Question 15

Supply management has evolved from a transaction-based, tactical function to a process-oriented, strategic function.

Accepted Answer

This statement is true. Supply management has become more strategic in nature, focusing on optimizing processes and aligning with overall business objectives, rather than just handling transactions and tactical tasks.

Question 16

Supply management may indirectly contribute to the organization's competitive advantage by:
A) the profit-leverage effect.
B) the return on assets effect.
C) reducing annual spend.
D) improving process efficiency.
E) all of the above.

Accepted Answer

The answer of Supply management may indirectly contribute to the...

Question 17

Evidence of the growth and influence of supply management in an organization includes:
A) fewer activities under the management or control of supply.
B) more intense involvement in fewer supply chain activities.
C) involvement in strategic planning and mergers and acquisitions.
D) a clear delineation between supply and accounting.
E) merging of supply and accounts payable.

Accepted Answer

Involvement in strategic planning and mergers and acquisitions indicates that supply management is playing a significant role in the organization's overall strategy and growth, reflecting its increased influence.

Question 18

As supply chains have become more global, the risk of supply disruptions has:
A) decreased because risk is spread among suppliers all over the world.
B) decreased because there are also more international laws and treaties.
C) stayed the same because the issues are similar wherever suppliers are located.
D) increased because other countries lack the business ethics of the U.S.
E) increased because of financial and exchange rate fluctuations.

Accepted Answer

Global supply chains are more susceptible to financial and exchange rate fluctuations, which can disrupt supply and increase risk.

Question 19

The profit-leverage effect of supply savings means that:
A) a reduction in money tied up in inventory improves profits.
B) a reduction in purchase spend increases profit more than an equal sales increase.
C) effective price negotiations with a supplier will lower the supplier's profits.
D) the buyer gains leverage over suppliers when purchases are standardized.
E) efficient and effective supply management processes will increase profits.

Accepted Answer

The profit-leverage effect of supply savings indicates that reducing purchase spend has a more significant impact on increasing profit than an equivalent increase in sales, due to the direct effect on the bottom line without the associated costs of generating additional sales.

Quiz 1: Purchasing and Supply Management

In manufacturing organizations, the dollars spent with suppliers fall into what range as a percent of revenues?

Supply makes a limited contribution to organizational risk management since most supply decisions have few downside risks that might impact the organization's strategy.

The true test of supply's contribution is when the chief executive officer and the management team recognize the value of supply and suppliers in reducing prices paid for goods and services.

The return on assets effect ROA) quantifies and measures:

Sustainability initiatives include the effective and efficient capture and disposition of downstream products from customers and the reduction of the impact of the organization's supply chains on the natural environment

Terms such as purchasing, procurement, supply, supply chain and logistics do not have standard definitions that are widely used across sectors and industries.

Performance of the supply management function can be viewed in two contexts:

Since labor and other costs greatly exceed outlays for purchased materials and services in most service organizations, supply is of little consequence in most service organizations.

One of the most important steps in achieving the potential of the supply function in a company is elevation of the chief supply officer to executive status.

The design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer is called:

The total purchase sales ratio the percentage of sales dollars paid out to suppliers) varies little from industry to industry.

Reductions in inventory investment primarily come from getting users to reduce their demand for inventoried items.

Supply has the potential to contribute to:

The increase in outsourcing has resulted in an increase in the percentage of revenue paid out to suppliers.

Supply management has evolved from a transaction-based, tactical function to a process-oriented, strategic function.

Supply management may indirectly contribute to the organization's competitive advantage by:

Evidence of the growth and influence of supply management in an organization includes:

As supply chains have become more global, the risk of supply disruptions has:

The profit-leverage effect of supply savings means that: